1. Team Sports has 10 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 200 thousand bonds ($1,000 par). If the common shares are selling for $40.00 per share, the preferred share are selling for $20 per share, and the bonds are selling at par, what would be the weight used for common stock in the computation of Team’s WACC? 2. Suppose that TipsNToes, Inc.’s capital structure features 60 percent equity, 40 percent debt, and its cost of equity is 10 percent, while its before-tax cost of debt is 9 percent. If the appropriate weighted average tax rate is 25 percent, what will be TipsNToes’s after-tax WACC? 3.Suppose you sell a fixed asset for $20,000 when its book value is $15,000. If your company’s marginal tax rate is 40%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?

1. Team Sports has 10 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 200 thousand bonds ($1,000 par). If the common shares are selling for $40.00 per share, the preferred share are selling for $20 per share, and the bonds are selling at par, what would be the weight used for common stock in the computation of Team’s WACC? 2. Suppose that TipsNToes, Inc.’s capital structure features 60 percent equity, 40 percent debt, and its cost of equity is 10 percent, while its before-tax cost of debt is 9 percent. If the appropriate weighted average tax rate is 25 percent, what will be TipsNToes’s after-tax WACC? 3.Suppose you sell a fixed asset for $20,000 when its book value is $15,000. If your company’s marginal tax rate is 40%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?

1. Team Sports has 10 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 200 thousand bonds ($1,000 par). If the common shares are selling for $40.00 per share, the preferred share are selling for $20 per share, and the bonds are selling at par, what would be the weight used for common stock in the computation of Team’s WACC? 2. Suppose that TipsNToes, Inc.’s capital structure features 60 percent equity, 40 percent debt, and its cost of equity is 10 percent, while its before-tax cost of debt is 9 percent. If the appropriate weighted average tax rate is 25 percent, what will be TipsNToes’s after-tax WACC? 3.Suppose you sell a fixed asset for $20,000 when its book value is $15,000. If your company’s marginal tax rate is 40%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?